Obama Faces Liberal Revolt On Social Security Cuts

His budget plan is expected to be released in the next few weeks, but President Barack Obama hasn't yet revealed if it'll include the Social Security cuts that were in his budget last year.

The president is facing a rebellion on his left flank, which is mobilizing against the so-called Chained CPI policy ahead of the November congressional elections. Chained CPI modifies the rate of inflation in a way that slows the growth of Social Security benefits, among other things.

"I think that in an election year, Democrats want to emphasize their strength on these issues, and you will see a lot of Democrats stress their positions to protect and strengthen Social Security," said one Democratic Senate aide, whose boss is up for re-election in 2014. "Putting chained CPI in the budget serves no purpose. It has no constituency. It's wrong on both policy and politics."

Sen. Bernie Sanders (I-VT) and 15 Democratic senators wrote a letter to Obama on Friday urging him to drop the proposal in his upcoming budget.

"Today, retirement insecurity is as high as it has ever been. Only one in five workers in the private sector has a defined benefit pension plan; half of Americans have less than $10,000 in savings; and two-thirds of seniors rely on Social Security for a majority of their income," the senators wrote. "Given this reality, we respectfully urge you not to propose cutting Social Security, Medicare or Medicaid benefits in your Fiscal Year 2015 budget."

A White House spokesperson didn't respond to a request for comment on the letter, or on whether the president's budget will include Chained CPI.

Obama embraced Chained CPI in his fiscal 2014 budget proposal one year ago this month, under enormous pressure from centrist deficit hawks and Republican lawmakers to concede something on entitlement spending. (Democratic sources say it was the least bad option they could come up with, having come out strongly against raising the eligibility age for Medicare.) It went nowhere in Congress because Republicans balked at Obama's demand for new tax revenues in return.

Ditching the idea now would constitute a backtracking and turn Obama into a piñata for Washington-area deficit hawks and the wealthy donors behind the push to cut entitlement programs. Keeping the idea in his new budget would anger the left and conceivably harm Democratic voter turnout in an election year when Republicans have an edge and when control of the Senate is up for grabs.

To that end, Senate Majority Leader Harry Reid (D-NV) strongly opposes Chained CPI and doesn't want Obama to include it in his budget. Outside liberal activists are adamantly against the policy and are instead coalescing around legislation offered by Sen. Tom Harkin (D-IA) to expand Social Security benefits, funded by lifting the $113,700 cap on income that is subject to Social Security payroll taxes.

"President Obama took smart steps in the direction of Elizabeth Warren's popular, populist agenda by talking about raising the minimum wage and income inequality. Proposing cuts to Social Security benefits would be an absurd step in the opposite direction -- and would be used by Republicans on the campaign trail to attack Democratic candidates," said Adam Green, co-founder of the Progressive Change Campaign Committee. "If President Obama wants to be on the right side of history, help millions of seniors, and help Democrats in 2014, he should join senators from red, purple, and blue states in calling for an increase in Social Security benefits -- paid for by asking the rich to pay the same rate in Social Security taxes as the rest of us."

Election-year considerations complicate the already bizarre politics of Social Security. The battle lines, essentially, are Beltway centrists and anti-spending conservative groups on one side, in favor of cutting it, and a majority of Democratic and Republican voters on the other side, against cutting it. GOP leaders want to slash the program but are reluctant to say so openly -- they want Democrats' fingerprints on the knife so they can share the political blame.

The temptation to use Social Security as a political cudgel can be strong. When Obama released his budget with Chained CPI last year, National Republican Congressional Committee Chair Greg Walden (R-OR) swiftly criticized him and threatened to make it a 2014 election issue, before his party leaders reined him in and reminded him that Republicans are supposed to support the policy.

Broader budget considerations aside, the Social Security trust fund is currently running a $2.8 trillion surplus and is expected to remain solvent until 2033, according to its 2013 Trustees Report.